Hypoxia-inducible factor 1α (HIF-1α) has been well established as a protective factor for intestinal barrier function in intestinal epithelial cells. Recently, a study found that increased HIF-1α-induced intestinal barrier dysfunction. We proposed that lymphocyte-derived interferon-gamma (IFN-γ) might be responsible for the intestinal barrier dysfunction caused by increased HIF-1α. HT-29 cell monolayers were grown in the presence or absence of IFN-γ under hypoxia. Then, the transepithelial electrical resistance was measured, and HIF-1α-modulated intestinal barrier protective factors were quantified by polymerase chain reaction (PCR). PCR, western blotting, and chromatin immunoprecipitation of HIF-1α were performed. Dimethyloxalyglycine (DMOG), an inhibitor of prolyl-hydroxylases (PHDs) that stabilizes HIF-1α during normoxia, and RNA interference of PHDs were also used to identify the signal pathway between IFN-γ and HIF-1α. We demonstrated that IFN-γ caused barrier dysfunction in hypoxic HT-29 cell monolayers via suppressing HIF-1α and HIF-1α-modulated intestinal barrier protective factors. We found that IFN-γ decreased HIF-1α protein expression instead of affecting HIF-1α transcription or transcriptional activity. Study also showed that DMOG reversed the IFN-γ-induced decrease in HIF-1α protein expression. Further, we found that PHD2 is the major regulator of IFN-γ-induced HIF-1α degradation by PHD inhibition and RNA interference. We conclude that IFN-γ caused barrier dysfunction by promoting PHD-, especially PHD2-, dependent HIF-1α degradation, and DMOG or PHD2 inhibition reversed this HIF-1α suppression and ameliorated barrier dysfunction. Combined with other studies demonstrating HIF-1α activation in lymphocytes promotes IFN-γ secretion, these findings suggest a mechanism by which increased HIF-1α-induced intestinal barrier dysfunction.